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TIME IS RUNNING OUT
By
GEORGE N. WILLIAMS and
SHAWN T. GEEGBAE

For those who can remember things as they were, Liberia was once a magnet for business persons and consumers from many parts of the world. World class investors were attracted to economic opportunities on our shores. Shoppers were drawn from as far away as East Africa. Foreign workforce sought jobs in an expanding economy. Monrovia's Ashmun Street financial area was populated with international banks that also often served as depository of funds to regional governments. In contrast, today Liberia survives on life support provided by an increasingly weary international community. A sobering question that needs a solution might be - is Liberia now the sick man of Africa?

Behind a more than half a century facade of prosperity, the Liberian economic regime consisted of an almost symphonic quartet of external players: direct foreign investment, commodity exports, foreign aid, and import trade dominated by expatriate residents. Little attention, if any at all, was paid to local industrial development and the internalization of commerce. Foreign direct investment, the mainstay of the economic engine, was attracted primarily for production of agricultural, forestry and industrial commodities destined for foreign markets. Bridging the growing gap in the national budget depended on sourcing of offshore loans and foreign aid from donor countries and organizations. Income retained onshore from returns on foreign investment Liberia was spent largely on debt financing, and generally on the importation of consumer non-durable goods.

An objective of the Investment Incentive Act of Liberia, codified in the Investment Incentive Code, is to further "industrialization and Liberianization". In reality however, industrial activities involving the transformation of rubber and timber into finished or even semi-finished goods could not occur because of a lack of focus on the very value added policies purposed by the Code. Production in the economy's sector leaders, rubber and forestry, amounted to little more than preparing these commodities as throughput for foreign factories and plants. In a cursory examination of the impact of the Investment Act on the economy and Liberian-owned businesses, interesting examples from the rubber and forestry sectors and the manufacturing industry are taken as cases in point.

A structural disconnect existed between policy promulgated by the government and those agencies responsible for policy execution. Recalling from experience, for instance, if a Liberian business, or perhaps even an expatriate-owned company in Liberia, had a contract to export Liberian produced rubber, that contract could only be fulfilled by dealing with off-shore traders in Europe or South Asia. In the forestry sector, activities such as road building and tree harvesting were permitted to be monopolized by the logging concessions themselves when these business opportunities could easily have been more efficiently outsourced to Liberian contractors. Since economic activities undertaken in the rubber and forestry sectors added little value to domestic production, these industries yielded insignificant amounts of local wealth. With the exception of a small number of Liberian rubber producers and logging companies, Liberian participation in these sectors consisted largely of providing labor factors of export production. Some employment benefits did nevertheless accrue, if this were ever considered a linked goal by the Code's administrators.

The domestic manufacturing sector that existed fared no better in terms of creating wealth for Liberians. This sector was dominated by foreign residents, who reinvested profits earned from import trading operations, and managed to obtain short-term credit from local commercial banks. A small number of Liberians, with real estate assets, were also able to invest in manufacturing ventures but, for the most part they made little impact on industrial activity. A negligible fraction of those Liberians did however manage to contribute relatively more to domestic output of goods by virtue of their resourcefulness and ability to make better use of the political system.

The flip side of whether time is indeed running out is that there does exist emergent opportunities for the new Liberia to build-up a different model of economic growth and development. Alleviating pandemic poverty should become the immediate goal of post-war administrations. Without a reduction in poverty levels there will be no development. More Liberians must be brought into the economic mainstream through job creation and involvement in business development. The first post-war administration should make it a priority to seek debt cancellation as an instrumentality for reconstructing the economy and increasing the standard of living for all. Cancellation of debt owed to the World Bank, the IMF and other development lending institutions would contribute to the removal of impediments to economic growth and to poverty reduction. Resources released through debt cancellation can be used to invest in education, health, and development infrastructure, thus helping to build a sustainable economic base and achieve political stability.

Foreign direct investment should by all means continue to be encouraged but, with preference for activities that transform our primary commodity resources. For those commodities which cannot be economically transformed locally, export operations by what may probably remain a largely foreign -owned enclave sector would proceed, but must be liberalized to provide incentives and opportunities for Liberian-owned business to participate in, for example, in micro-enterprise manufacturing that might be feasible in these sectors and service activities such as export sales and marketing.

As unpopular as this may appear to some, there should be absolutely no discrimination of business investment in Liberia on the basis of nationality of ownership. On the other hand, policies should be structured and implemented to set requirements for new trading businesses, and to ensure a level field of enterprise for all. The perspective of these policies would be to regulate business financial and locational transactions. The use of national zoning codes and regulation would become standard procedure for approval of all new business licenses. It would require that business buildings, commercial and industrial, comply with set standards, and that locally regulated zoning ordinances be used to determine where a new business may locate, what type of facility it may occupy, and permitted uses of commercial and office structures and land. In the not too distant future, foreign-owned business owners and investors should be required to originate some portion of their initial investment from off-shore. This should create a tendency to increase real direct private foreign investment and free-up local funding for Liberian citizens to invest.
Leonardo Da Vinci, the Italian Renaissance personality, once remarked, "Time stays long enough for those who use it." It appears unlikely that Liberia will return to a position of having the capacity to compete equitably for European and American capital investment and technology in the near future. The time is therefore now to explore alternative sources of capital investment and technology. The emerging economies of South and East Asia have created options for sourcing capital investment and development resources. Why not expand those opportunities to attract available investment and development resources from non traditional sources?

An impediment to attaining these objectives is the existence of corrupt and mismanagement practices that exacerbate our already debilitative economic condition however, corruption can be countered by institutionalizing accountable governance to face these threats from within and without. When leaders are held accountable, positive results are possible. Part of the process of accountability must be to invalidate intellectual hegemony. In the absence of free exchange of ideas, intellectual hegemony becomes a tool of choice in the hands of those who are able to exert self-serving political, economic and communications power. It is used to shape and influence policy makers and political opinion. When externally imposed it produces a thought pattern that discourages alternative thinking regarding which prescriptions and strategies of action to take, thus creating dependency for data, analysis and policy. Democracy and good governance are inherently desirable but cannot be embraced from outside. A new kind of thinking that would result in innovative and efficient strategies and procedures needs to prevail in the new Liberia. The elimination of intellectual hegemony will offer up alternative economic policies for contemplation.

What should Liberia's exit strategy from tenacious economic decline and political drift be? Many factors could expedite the progress of development and growth in Liberia. Some of them are mentioned here for consideration: Establishing legitimate institutions of responsible democratic governance, debt cancellation, reduction of poverty to create political stability, prevention of corruption as an imperative for development, and elimination of intellectual hegemony to rescind one-sided leveraged information. Post-war Liberia, as a nation, people and government, must act expeditiously to address these concerns, and by so doing may produce the desired outcome of rolling back the erosion of state capacity.

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About the Authors: George N. Williams is a graduate of Boston University, Boston, Massachusetts and holds a Master of Arts in Economics. He was a merchant banker with First Liberia Investment Corp., an affiliate of the former Equator Bank, Hartford, Connecticut, Director of Investment Promotion at the National Investment Commission, R.L., and a Liberian business owner. He is currently Business Development Manager with the Alexandria Economic Development Partnership, Inc., Alexandria, Virginia. Shawn T. Geegbae is a recent graduate of Syracuse University, Syracuse, New York, where he earned a B.S. in Finance and International Relations. He will return to Syracuse this fall to complete his Masters. Both men are Liberian nationals.